- Generating passive income is a common goal among real estate investors.
- Mike Hills has been “house hacking” for close to 20 years and has built a portfolio worth more than $8 million.
- Property managers, the right software, and a smart team are three things that he said will be sure to add to passive income.
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Generating passive rental income is the goal for any smart real estate investor, but it’s not always easy.
There are things about a property every investor should know before they close a deal, but sometimes, the unexpected happens, and landlords lose.
That said, there are a number of strategies investors should be mindful of that can help them secure a maximum return and avoid circumstances that can lead to financial setbacks.
A property management expert, Mike Hills has been house hacking for almost 20 years, and knows what investors need to do to stay on top. He owns a portfolio worth more than $8 million, built off the strategy in which owners of multifamily rental properties live in one of their units while collecting rent from the others.
Here are the three things Hills has invested in to boost his passive income from that portfolio.
1. Hire a property manager to maximize profitability
Some landlords steer away from property managers under the impression a management service would just reduce their own income, but Hills said that’s simply not the case.
“People think they’re saving money not using a property management team, but people who manage themselves don’t put a premium on their time,” Hills said, adding that landlords who manage themselves don’t raise rents as much as they could or should. “They don’t treat it like a business and get attached to their tenants.”
2. Use software to track properties
At Atlas, one team alone manages around 3,300 rentals with AppFolio, which tracks maintenance and even allows communication with residents through a single platform.
3. Surround yourself with a good team
A good lawyer, a good banker, and a good CPA are all essentials, according to Hills, and he pointed out that people usually get hurt in property management when it comes to finding a good contractor. “You need a good contractor you trust who you’ve done deals with before, that’s one of the ways you get in trouble,” Hills said, adding that where people tend to get hurt the most is usually in property management and construction.
“You can do the worst deal in the world and manage it the right way and make money,” Hills said. “Or you could do the best deal in the world and manage it the wrong way and lose money.” With that in mind and with all the right players involved, Hills said, strong property management is key.